News Brief

RBI Keeps Key Lending Rate Unchanged at 6.5 Per Cent For Eighth Consecutive Time, FY25 GDP Forecast Hiked To 7.2 Per Cent

Kuldeep Negi

Jun 07, 2024, 10:57 AM | Updated 10:57 AM IST

RBI Governor Shaktikanta Das (Representative image)
RBI Governor Shaktikanta Das (Representative image)

In its first meeting after the Lok Sabha election results were announced, the The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Friday (7 June) decided to keep the repo rate unchanged at 6.5 per cent for the eighth consecutive time.

During a press conference, RBI Governor Shaktikanta Das also announced an upward revision of the GDP growth projection for FY25 to 7.2 per cent, an increase from the earlier forecast of 7 per cent.

The government has tasked the RBI with maintaining Consumer Price Index (CPI) inflation at 4 per cent, with a margin of 2 per cent on either side.

In April, the Central Bank opted to keep the repo rate unchanged at 6.5 per cent and maintained the policy stance of 'withdrawal of accommodation,' a decision reached through a 5:1 majority vote by the six-member MPC, led by Governor Das.

The repo rate was last hiked in February 2023 and since then, it has remained at the same level for the previous seven bi-monthly policies.

The unchanged repo rate means that external benchmark lending rates tied to the repo rate will remain stable, providing relief to borrowers as their equated monthly instalments (EMIs) will not increase.

However, lenders might still raise interest rates on loans linked to the marginal cost of funds-based lending rate, as the full transmission of the 250 basis points hike in the repo rate from May 2022 to February 2023 has yet to occur.

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Kuldeep is Senior Editor (Newsroom) at Swarajya. He tweets at @kaydnegi.

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